Apple Ordered To Pay Back $35 Million Worth Of In-App Purchases

As anyone with a young child and an iPhone knows, children's games are a gauntlet. If you don't have your settings in a safe place, children can easily spend an extravagant amount of money on in-app purchases. The Federal Trade Commission has now ordered Apple to pay back $35 million in in-app purchases to parents.

According to the FTC, Apple did not do enough to ensure that these purchases were made with consent of parents.

Apple CEO Tim Cook is far from happy with the decision. In a letter to employees (posted by 9to5Mac) Cook claimed that Apple had already refunded a number of these purchases, contacting 28 million customers to confirm that certain purchases were, in fact, made with consent. "When some emails bounced," he wrote, "we mailed the parents postcards. In all, we received 37,000 claims and we will be reimbursing each one as promised."

But Apple will still have to pay the $35 million, a decision that Cook claims "smacked of double jeopardy".

Regardless of how fair the decision actually is, it's a wake up call to parents worldwide. There are settings available on the iPhone to help stop these sorts of purchases from going through. If you have children and they play games on your iPhone, it's worth checking that your phone has sufficient protection.

Apple must refund $32.5 million for kids' in-app purchases [CVG]


Comments

    Shitty parents cause other people grief. Full story at 11.

    Last edited 16/01/14 9:23 am

      This comes up every time. Accidental purchases can be due to poor parents, but also due to distracted, stressed or technologically weak parents.

      Apple do not make it easy to disable for some people - those iOS settings suck. Given the amount of money that Apple make from these exploitative in-app purchases, it's not unreasonable to expect then to set up more options. Maybe a walkthrough on setup? Maybe a weekly reminder email of the current setting, how much it has cost, and detailed instructions on how to change the setup if they wish. Or some kind of two factor authentication option for purchases, like an email authorisation link.

      Whatever. But don't try to write it off as "shitty parents". A hell of a lot of the blame still lies with Apple.

      Last edited 16/01/14 10:27 am

        Maybe Apple and Google and all the other companies could send employees to the house of every customer and educate them on personal hygiene, cooking, and everything else in life, too!

        All the hand-holding people expect in everything these days is pathetic, we've become a society of blame-shifting initiative-lacking cowards.

        Last edited 16/01/14 10:09 am

          If Apple had invented personal hygiene and cooking and were making many many millions of dollars a year from them, then maybe they should.

          Apple have created an infrastructure that makes consumers' money disappear in a flash to pay for, essentially, nothing. Genius. Now they are being forced to think about ways to rein this in further. I don't see how anybody can think this is a bad idea.

          You have to admit, the default settings are set up for trouble. The iPhone and iPad should come with the password required setting set to 'immediately' by default.

          If your kid accidentally spends money on your new piece of tech because you're not tech savvy, that's not a sign of shitty parenting. You've got to remember, most people my age (I'm a parent of 2) didn't grow up with computers and don't understand all this stuff. We got computers at my school when I was in grade 11. I didn't have the internet until quite a while after graduating. If you've grown up saturated by technology there's a good chance you hear about this stuff and think people are dumb, ignorant or bad parents. Even the most loving and capable parents will find themselves unprepared and out of their element at some point. The biggest secret is to not judge and keep your thoughts to yourself. You might think a parent that hands their kid an iPad is a shitty parent, but I think the same about parents who feed their kids fast food.

          But eh, who am I kidding, the people who seem to know the most about parenting all seem to live in the comments section of the internet, standing by to pass judgement and rate your performance out of 10. I salute you, super-parents.

      Not a parent comments on other people's parenting. Full story at 11:01

        When people don't supervise their crotch droppings and it potentially has a negative effect on shareholders' investments, it probably deserves comments.

          So you don't actually understand kids then? Or, from the sounds of it, ios?

            Don't you love how people who aren't parents have this fairy tale perception that good parents supervise their kids all day long? Like, you're going to sit there and creepily look over your kid's shoulder for an hour or two while they play the iPad? Fantasy land.

            When I was a kid, I lived in the country and my afternoons involved grabbing an axe or a slug-gun and going off to explore the neighbourhood, cutting down trees, shooting stuff, building cubby-houses. Parents who over-supervise their kids pretty much suffocate them. Kids will never learn to make their way in the world if they have parents steering their ship. Unsupervised play is critical. You've just got to be a good parent and have boundaries in place that reduce what can go wrong. But something always will go wrong and that's great, that's how life works and that's how people learn.

            My 6 and 8 year old explore the neighborhood every afternoon on their scooters and meet up with their friends for adventures. I make a point to know all the houses they visit and get phone numbers. Ain't no way I'm gonna follow him around and supervise his every movement.

            Last edited 16/01/14 12:52 pm

              I'm not saying watch over their shoulder, I'm saying don't give 'em them unsupervised access to your money. It's up to parents to adapt to the kids, not the other way around. If they can't handle it, they shouldn't breed.

                Actually the law in Australia states otherwise. Firstly a contract is not legally binding on anyone under the age of 18 except for specific and defined needs such as eduction, Housing, and necessary Foodstuff.

                In these instances Apple allowed multiple transactions that were NOT authorised by the account holder (the adult) in a way that was not reasonable under current Electronic Transaction practices.

                To blame the parent is like blaming you for the allowing of your debit card to fall into the hands of a skimmer who then removes all of your cash from your bank account. Luckily in that situation the onus of proof is on the bank to prove that you actually allowed this to occur and they have to reimburse your money otherwise (within 48hrs actually).

                Whether the kids made the transactions unsupervised is irrelevant in this instance since the accounts were found to be unreasonably left open for ANYONE to access without any form of authority. It is pure negligence on Apple behalf which is why our ACCC is currently looking into the same thing here. Also to note is that the UK equivelent of the FTC and our ACCC has already fined Apple and gotten restitution for UK consumers.

                  …except that the parents are already getting refunds, and the FTC is fining Apple to make money for themselves.

                  Last edited 17/01/14 9:54 am

    What I don't understand is why is Tim Cook being so pissed about it

    I assume the reason the lack of security regarding in app purchases is actually part of the design to ensure "accidental" purchases.

    Their means of "contacting customer" is sending an automatic email receipt of purchase. I have never receive any email from apple trying to confirm my purchases, only receipts of purchase.

      Because American Consumer law is basically non existent and this fine by the FTC (our equiv is the ACCC) sets a new precedent for American Consumers when it comes to electronic transactions.

      The church of Apple have been found to be negligent in this instance and they are pissed that anyone in government has the audacity to question their customer relations.

    It's been a long time since I've had an iphone but isn't there a popup that asks you to type in your password whenever purchasing something? You can turn this off of course, but still, what else could they do?

      Oddly enough that was a feature added in rather late into the iPhone's life. Originally there was no password required and no way to turn off IAPs.

      The backlash caused by this of course added the features we currently have.

      I have no real sympathy though, some of those free to play games aimed at young children are utterly disgusting and feel rather unethical to me.

      Back when the court case was initially filed (a year or so ago), the time between password prompts was very large, meaning that it was very easy for a child to rack up a debt before the next prompt appeared. Apple have since shortened that window considerably and added other child protection controls due to the case.

    Why is Cook so angry? $35 million is a drop in the bucket for Apple. They'll make that back within a few days.

    Just read the letter in full, and I do actually agree with Tim Cook. It appears stupid that the FTC is getting involved in a process that has already been addressed in the courts, but it might be that they're trying to really stop it from ever happening again. As I mentioned above, Apple have got better since introducing these purchases, but there are still many things they can do to ensure they are authorised.

    It also sounds like the whole process of refunding is (unavoidably) a mess. If I received an email asking whether my kid purchased crap without my consent for some game I'd already uninstalled, I'd consider saying yes to recoup the money too.

    Imo you shouldn't even be letting your kids play with your phone. I've seen so many parents hand off their iPhones to their little kids that they end up dropping it, drooling over it, forgetting it's worth an easy $700. People should be taking responsibility, not complaining that $500 has been used on their credit card due to lack of it. My little cousins always try and steal my phone and I refuse to give it to them unless I'm actually watching them

      Finally, someone without kids giving parenting advice! It's about damn time, and...

      OH SHIT, THE SARCASM LOBE IN MY BRAIN JUST EXPLODED!

      I let my kids play with my older iPhones from which I have upgraded. I've told them to look after them because when they're old to have a phone, they can have them. So they look after them really well.

      lol I guess you do not have kids.... then you do not know....

      I am sure every parrent that let kids play with their iPad and iPhone, they know the reason why they giving it to the kids... I was the same ... planning to to do that to my son, but after I have a kid... circumstances are different.

      I will let you wonder the reason why ... not going to spill it out...

    The one that I don't get is why do they blame Apple, I thoguht to buy in-app purchases, you need a password or fingerprint (on 5s), so I guess it's the parrent's fault for telling them the iCloud login...

    Or am I wrong?

    How is it a wake-up call for parents? If anything, it is an indulgent pat on the head to them while saying "it's ok, you can still be a shit parent. Others will take the brunt of the consequences emanating from your lack of wits and control over your spawn."

    How do they know it was a child that made the purchase ?

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